Obama urges GOP to support 'promise zones'

Jan. 9, 2014
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President Obama speaks about the 'promise zone' plan Thursday, Jan. 9, in the East Room of the White House. / Carolyn Kaster, AP

by Aamer Madhani, USA TODAY

by Aamer Madhani, USA TODAY

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WASHINGTON - President Obama launched a program Thursday that directly addresses his second-term priority of combating income inequality in the USA.

Unlike his recent pushes to extend emergency unemployment insurance and raise the minimum wage, the president's call to establish five so-called "promise zones" to bolster private investment in economically distressed communities throughout the country was met with a measure of enthusiasm from Republican adversaries.

"It's one thing to say we should help more Americans to get ahead, but talk is cheap," said Obama, who praised Republican adversaries, including Senate Minority Leader Mitch McConnell and Sen. Rand Paul, both of Kentucky, who attended his White House announcement.

"This should be a challenge that unites us all," Obama added. "I don't care if the ideas are Democrats or Republican. I do care that they work."

Obama announced he was designating the first promise zones in neighborhoods in Los Angeles, Philadelphia and San Antonio as well as swaths of southeastern Kentucky's coal country and the Choctaw Nation of Oklahoma.

The announcement comes as Washington marks the 50th anniversary this week of President Lyndon Johnson launching his War on Poverty.

In establishing the five promise zones, Obama is a following up on a plan he first unveiled during last year's State of the Union to target 20 of the hardest-hit towns for economic revitalization by the end of his presidency.

With the designation, the communities receive preferential consideration for 25 federal grant programs and the federal government will invest direct technical support as the communities try to revitalize languishing neighborhoods.

Obama is also calling on Congress to establish tax breaks for companies that establish businesses or hire workers in the promise zone communities, a facet of the program that his advisers say is critical to the initiative working.

"Yes, these promise zones will work without the tax credits, but no, they won't work to full capacity," said Housing and Urban Development Secretary Shaun Donovan. "We believe the tax credits are a critical part in accelerating job creation in these communities. We can improve the housing, we can make sure the educational opportunities are there. But if there isn't a job available at the end of that path, it's going to be a heck of a lot harder for the kids (in these communities) to get ahead."

McConnell suggested Thursday that Congress consider tax incentives for promise zones in a potential deal to extend the lapse unemployment insurance. McConnell and Paul are also sponsoring broader legislation to establish "Economic Freedom Zones," which would allow struggling areas to cut taxes to spur development.

"Promise zones are something we could build on with far more comprehensive approaches," McConnell said.

Paul said Obama's motives are good, but the program should put more emphasis on tax cuts than on government grants. He said "dramatic" reductions of taxes across the board would enable communities to keep more of their own money and invest in themselves.

On Wednesday, Sen. Marco Rubio of Florida - a potential GOP presidential candidate in 2016 - used a speech to mark the anniversary of Johnson's 1964 declaration to eradicate poverty to deliver his own take at solving the scourge of poverty.

While he criticized Obama for doing too little to move the ball on reducing income equality, Rubio's remarks shared the spirit of Obama's call that a child's future should be determined by her work ethic and not her ZIP code.

"The only solution that will achieve meaningful and lasting results is to provide those who are stuck in low-paying jobs the real opportunity to move up to better paying jobs," Rubio said. " And to do this, we must focus on policies that help our economy create those jobs and that help people overcome the obstacles between them and better paying work."

Republicans, however, criticized Obama for moving too slowly on establishing his promise zones.

"Last year President Obama promised to partner with the 20 hardest-hit areas of the country and 330 days later he still doesn't have results," said Republican National Committee spokeswoman Kirsten Kukowski. "While House Republicans have passed dozens of bills to encourage economic growth, incomes are down and poverty is up for far too many Americans on Obama's watch."

Revitalization plans

Each community picked by the Obama administration submitted an economic revitalization plan. In the first round, the administration focused on communities where at least 20% of the community live in poverty.

In Los Angeles, the city submitted a plan to increase affordable housing, expand technical training programs through the city's community college and expand bus service and bike lanes in the city's Pico Union, Westlake, Koreatown, Hollywood and East Hollywood neighborhoods.

In Philadelphia, Mayor Michael Nutter's office proposed focusing on the Mantua neighborhood, one of the poorest neighborhoods in a city where the poverty rate hovers above 26%.

The city will receive grants to support adult education as well as funding for a Drexel University-William Penn Foundation education program that prepares students for careers through data-driven instruction. The police will also increase their presence in the neighborhood to try to reduce crime to make it more attractive to new residents and businesses.

Obama's promise-zone push reflects a growing move to seek a "place-based" solution to alleviate poverty, said Andrew Reschovsky, an economist at the Lincoln Institute of Land Policy in Cambridge, Mass.

But transforming any of these communities, Reschovsky cautioned, will take patience.

"You are not going to transform a neighborhood in West Philadelphia with extraordinary levels of poverty in three years," Reschovsky said.